On 1 July 2018, Adat Ltd. purchased land for $1,200,000 and buildings for $500,000 paying cash. The estimated useful life of the buildings was 40 years, with $20,000 residual value.

On 1 October 2018 machinery was purchased for cash at a total cost of $117,000. Installation costs of $3,000 were also paid.The estimated useful life of the machinery was 4 years with an estimated residual value of $8,000. Adat Ltd. uses straight line depreciation. The entity's balance date is 30 June.

Required:

1.Prepare journal entries to record the purchase of assets and the depreciation expense for the year ended 30 June 2019.[6 marks]

2.On 30 June 2019 the entity conducted an impairment test on the buildings. The fair value was assessed at $460,000 with estimated costs to sell of $20,000. The value in use was estimated at $450,000. Determine if the asset is impaired and prepare the impairment journal entries if required.[4 marks]

3.On 1 July 2019 Adat decided to revalue the land to $1,400,000. Prepare the journal entry for the revaluation.[2marks]

4.On 31 December 2019, owing to a change of product mix the machinery was sold for $80,000.Prepare the journal entry(ies) to dispose of the machinery. [4 marks]

If Adat had to revalue the land downwards by $300,000 one year later, explain how you would account for this revaluation?[3 marks